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Performance ranking divergences within sectors

May 6, 2013

The ideas from the first performance ranking article can be applied to sector constituents. This will be useful for those having to manage stock weightings in a sector fund, or any group of stocks where a benchmark is available to plot relative strength against.

Example: Anadarko Petroleum (APC) vs SPDR Energy (XLE)

APCXLE

  • In late February 2010, APC vs XLE forms a bearish divergence on its 14 week RSI
  • Also, the rank of APC within all the components of XLE has dropped from 97 in September 2009 to 87
  • The divergence takes another month to play out, with the relative line peaking in early April 2010, still on a bearish RSI divergence. The PR has dropped to 69
  • From then, APC strongly underperforms XLE for three months

 

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